Companies Brace for Powerful Impact of Lease Accounting Changes

Proposed new accounting standards have been drafted in order to push lease liabilities back onto corporate balance sheets. Such a change would represent a major shift for companies that have typically favored the off-balance-sheet treatment of operating leases, and it could have a significant impact on corporate decisions to lease or purchase real estate in the future.

The proposed guidelines are a joint initiative by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board to create a uniform global standard and greater corporate transparency in lease accounting procedures. The most recent draft would establish one method of accounting that requires firms to recognize all lease liabilities and assets on their corporate financial statements.

Another key component is that companies would be required to record the lease value or rent commitment over the entire lease term, including renewal options. Although the intent is to stop off-balance-sheet activity, the changes would add significant weight to corporate balance sheets.

For example, a firm that pays $1 million per year in rent for its corporate headquarters would quickly see its liability multiply depending on whether it has a five-year or 15-year lease. Companies would appear more highly leveraged, which could affect factors such as corporate credit and existing debt covenants.

Although FASB cites data that values leasing activity at $640 billion in 2008, other industry sources estimate that current volume as high as $1.3 trillion in operating leases for U.S. firms alone. Once the guidelines go into effect, which many in the industry believe will occur in 2013, both new and existing leases would be immediately affected.

One fear is that the new accounting practices could deter companies from signing long-term leases, or encourage firms to own rather than lease facilities. Both of those factors could be a detriment to the sale-leaseback and net-lease finance niche where leases typically extend 15 years and beyond.

Sale-leaseback transactions have accounted for $24.8 billion, or slightly more than 50%, of the $46.6 billion in single-tenant sales globally over the past 12 months from June 2009 through June 30, 2010, according to Bloomberg Business.

Welcome to the 'New Normal': Modest Investment in Capital Equipment

Banks and borrowers will continue to move tentatively in 2011 before investing big dollars in new machinery, says NEFA's Peretore.

Manufacturers might be getting ready to invest in new equipment, but several signs point to only modest growth in 2011, as questions of financing and confidence moving forward set the stage for a tentative recovery in capital investment.

Just as the market is ripe for first-time home buyers, an overabundance of supply and a dearth of demand have created ripe opportunities for companies to invest in new industrial machinery. But according to Frank Peretore, an attorney who focuses on equipment leasing, and who sits on the board of directors for the National Equipment Finance Association, companies might be stabilizing and the banking industry is returning to health, but that still doesn’t mean large-scale investments are taking place.

What do the Tax Cut Extensions mean for business looking to purchase equipment?

Tax Cut Extension- How It Applies To Equipment Leasing
In December 2010 President Obama signed into law a tax bill extending cuts for all Americans. The benefits range from tax cuts for millionaires and the middle class to longer-term help for the unemployed.
Business will benefit from the 100% expensing provision. For investments placed in service after Sept. 8, 2010, and through Dec.31, 2011, the bill provides for 100% bonus depreciation.
Operators will be able to depreciate 100% of equipment purchased in 2011. The bill also extends increases in the maximum amount and phase-out threshold under section 179, the association added. Under current law, a taxpayer with a sufficiently small amount of annual investment may elect to deduct the cost of certain property placed in service for the year, rather than depreciate those costs over time.
Expensing - One-year 100 percent depreciation. For 2012 Section 179 at $125,000 and $500,000 phase out – alas not continuing the much more beneficial $500,000 and $2,000,000 phase out which is still good for 2010.  According to Joint Tax the provision in general extends the expensing to qualified property placed in service after September 8, 2010 and before January 1, 2012.
 Boost to Section 179 Depreciation
Rather than depreciating business property over several years, Section 179 now allows a taxpayer to expense the entire cost of certain property in the year of purchase. The new law allows a Section 179 deduction for up to $500,000 in 2010 and 2011 for qualified property. If the total purchase of all acquired property exceeds $2 million, there is a dollar-for-dollar decrease in the allowable deduction.
Qualified property includes tangible personal property (such as equipment and furniture) and software that must be used more than 50% in a trade or business. Prior to this new act, real property (buildings and structural components, air and heating units) did not qualify for this special treatment. Now the definition of qualifying property expands to include ‘qualified real property,’ and limits the Section 179 deduction on this type of property to $250,000.
Qualified real property includes the following:
• Qualified leasehold improvements
These are improvements to interior parts of non-residential real property placed in service more than three years after the date the building was first placed in service. This does not include improvements to the exterior, elevators or escalators, common areas, or internal structural framework.
• Qualified restaurant property
A building or improvement to a building if more than 50% of the building’s square footage is devoted to preparation of and seating for on-premises consumption of prepared meals.
• Qualified retail improvement property
Improvements to non-residential real property if such space is open to the general public and used in the retail business of selling to the general public that meets the other definition of qualified leasehold improvements.
The Section 179 deduction is allowed to the extent of taxable income, with the remainder carried forward to the next year. Be careful, however, because Section 179 carry-forwards on qualified real property are not allowed beyond 2011.
 Extension of ‘Bonus’ Depreciation
The bill also extends through 2010 the 50% first-year bonus depreciation that had expired. The allowance is 50% of the depreciable basis of qualified property for assets purchased and placed in service for 2010. To qualify, the property must be a new (not used) asset that has a depreciable tax life of 20 years or less, software, water-utility property, or qualified leasehold-improvement property.
Land improvements also qualify as eligible property and include items such as sidewalks, roads, fences, bridges, and landscaping. There are no purchase or income limitations as described in the Section 179 deduction, and many large businesses can benefit from taking this extended provision to offset taxable income.
 New Reporting Requirements
The law provides for $12 billion of tax relief and builds in some revenue raisers to help foot that bill. One revenue booster requires informational reporting (typically 1099-MISC) on rental-property expense payments of $600 or more for individuals who receive rental income. There are exceptions to reporting requirements, such as for individuals who can show that the requirements create a hardship, individuals who receive rental income of a minimal amount, for members of the military who rent their principal residences temporarily. Further guidance on these exceptions should come out by the end of the year.
 What This Means for Your Business
For many, 2010 may be a year when cash flow does not match taxable income, and businesses are striving to maintain their capital in the business instead of paying taxes. If qualified-asset purchases are less than $2 million, a Section 179 deduction can be taken to reduce taxable income.
 In addition, if there are new land improvements or qualified asset purchases over $2 million, taxable income can be offset by taking the bonus 50% depreciation. Businesses can also elect to exclude real property from qualified Section 179 property if the regular $2 million cap is close to being reached. Whichever method is used, there are several strategies that may be implemented to defer taxation. In deferring taxation, property owners have additional cash available to grow their business.
 SBJA and Section 179 Deduction (Adjustments)
A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property.
 The Small Business Jobs Act (SBJA) of 2010 increases the IRC section 179 limitations on expensing of depreciable business assets and expands the definition of qualified property to include certain real property for the 2010 and 2011 tax years. Under SBJA, qualifying businesses can now expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011.
 Without SBJA, the expensing limit for section 179 property would have been $250,000 for 2010 and $25,000 for 2011. The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2,000,000.
 The definition of qualified section 179 property will include qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for tax years beginning in 2010 and 2011.
 Increased Bonus Depreciation for 2011
The bonus depreciation amount for business assets purchased in 2011 has increased to 100%. This means you can fully depreciate the cost of any business asset purchased next year. The bonus depreciation amount for business assets purchased in 2010 is 50%.
 For additional information on how the tax cut extensions apply to your business consult a licensed CPA or attorney.

For addtional information on equipment lease financing contact the experts at Mazuma Capital 801.816.0800
 Source:
IRS.gov
http://www.irs.gov/formspubs/article/0,,id=177054,00.html
Smart Money, Tax Blogs

Major Incentives for Equipment Purchases in Year-End Tax Bill

Companies have something to cheer about when it comes to their upcoming large equipment purchases.  The new tax-law that went into effect this week includes 100% expensing for qualified capital investments, including investments in plants and equipment, for 2011 and a 50% deduction for 2012. This is great news as companies remain uncertain when it comes to the economic growth for business.
 
Mazuma Capital supports the ELFA in their crusades for the use of capital formation tax incentives.  The focus remains on the need to invest in plants and equipment as a key component of economic growth and competitiveness. The provision allowing the full deduction – without monetary limitations – of qualified capital investments through 2011 and the 50% bonus depreciation level for 2012 is a major win for economic growth.
 
We hope to see growth in manufacturing and in many industries whom have felt the pinch of the current economy.  Agriculture, construction, manufacturing and transportation outlooks seem positive as growth is reported.  We will all be routing for the best as we continue full steam ahead into 2011.

Bonus Depreciation Provisions Cleared in Tax Relief Package

Bonus Depreciation Provisions Cleared in Tax Relief Package
With just weeks to go before the end of the year, Congress cleared tax relief legislation extending the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for two years.

The Tax Relief Act provides for an AMT "patch," a one-year payroll tax cut, 100% bonus depreciation through 2011 and 50% bonus depreciation for 2012 and a top federal estate tax rate of 35% with a $5 million exclusion, and more.

Mazuma Capital: Mazuma Capital Announces Exlusive Broker Services ...

Mazuma Capital: Mazuma Capital Announces Exlusive Broker Services ...: "Draper, Utah December 16, 2010–Mazuma Capital announces a new extension of services to include an exclusive broker program. The offeri..."

Mazuma Capital Announces Exlusive Broker Services Program

Draper, Utah December 16, 2010–Mazuma Capital announces a new extension of services to include an exclusive broker program.  The offering is part of Mazuma’s Strategic Development Program and provides innovative turnkey solutions for brokers and their clients. 
The broker program has been formed in conjunction with Mazuma Capital’s new affiliation with the NAELB (National Association of Equipment Leasing Brokers).  The exclusive broker program is available to brokers whom seek funding from $100K to $10MM for qualified middle-market clients.  Through a private label solution or as a turn key service provider brokers may access this program to reduce turn-around time and streamline processes.
Mazuma Capital possesses financial backing that provides strength to fund transactions internally, allowing Mazuma to carry residual risk, fund projects over extended installation periods, and other capabilities that most of Mazuma’s competitors can’t match. By bringing together these unparalleled resources coupled with a unique approach to the market place, Mazuma Capital can deliver the quality, timing, strategy and strength that top brokers are seeking.
“We know and understand the competitive landscape of equipment leasing right now.  With the migration of the main stream banks, money centers and independent leasing companies to better credit markets, these sources continue to tighten as they stretch to find ways to reduce static loss, take less risk and strengthen their respective portfolios. This has made the “A” credit markets extremely competitive and left a gaping hole in the “B” credit markets.  Mazuma Capital, staying true to its niche`, has successfully funded more than $100MM in “B” credits since the start of the downturn.  This is due to our strategic partners who remain flush with capital and our own internal capital and expertise in being able to structure and carry equity risk on transactions that have merit.   As relationship continue to win deals, it is important for Mazuma to be an advocate for these companies, and the brokers that represent them.  By following best practices and delivering on our commitments we have created an amazing broker program that provides flexible lease options to meet the needs of brokers and their clients”, said Jared Belnap, Mazuma Capital CEO and President. “It is Mazuma’s goal to help promote these best practices and incorporate them into each leasing transaction and relationship we enter into”, said Belnap.
About Mazuma: Mazuma Capital is committed to our client’s and partner’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance and subscribes to the ELFA Code of Fair Business Practices, and the NAELB Ethical Conduct Code.

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Media Contact – jfuchs@mazumacapital.com 801-816-0800 X291

CFOs Cautiously Optimistic About 2011- Leasing Provides Great Options For Purchasing

According to Barrons.com it seems most CFO's are cautiously optimistic about the coming year and how the Economy will play out (http://blogs.barrons.com/stockstowatchtoday/?mod=BOL_hpp_stw)
Some of the largest concerns we see lingering are CFO's trying to find cash to pay for items as they plan for new purchases. The danger in using existing bank/credit lines or current cash can be detrimental if an emergency arises, or as our economy lie in a state of limbo. So what can CFO’s do now in planning for those much needed purchases??

Now more than ever it is time for CFO's to look towards leasing options for new equipment purchases.  With the uncertainty of the economy more businesses are looking at the benefits of leasing. Mazuma Capital can help you make the best choice for you and your company. Some of the many reasons clients have chosen to lease their capital equipment from Mazuma Capital are:

• Obtain a fixed rate of capital
• Ability to match the stream of payments with the useful life of /revenue generated from the equipment
• Flexibility as to the deployment and use of equipment
• Equipment management and replacement strategy
• Preferential tax and accounting treatment
• Deploy cash to more vital areas such as payroll, M&A, inventory, etc vs. into a depreciating asset
• Avoid or eliminate technological obsolescence
• Access to an inexpensive cost of capital

Whether you’re a fortune 500 NYSE company with the goal of maximizing ROE and EPS, or a large insurance company looking to convert some of your non-admitted assets into cash for capital and surplus benefits, it is important to find a leasing structure that lends to the success of your financial goals. 

From health care and HIPPA compliance to GAAP and SAP it is important to have a team of experts on your side when choosing your options.  Mazuma collectively takes over 100 years of leasing experience when crafting flexible leasing options for you.  With so many rules, governance, and changes there are no guarantees that there is always a solution, but rest assured that we will exhaust all of our resources in an attempt to satisfy your objectives.

Mazuma Capital: Solar Energy Industries Association Applauds Inclu...

Mazuma Capital: Solar Energy Industries Association Applauds Inclu...: "Extending program will drive U.S. solar industry growth and job creation in 2011 The 1603 tax credit has created flexibility for funding re..."

Solar Energy Industries Association Applauds Inclusion of Treasury Section 1603 Program Extension in Senate Tax Compromise

Extending program will drive U.S. solar industry growth and job creation in 2011

The 1603 tax credit has created flexibility for funding renewable energy projects and is fundamental for keeping the solar industry growing in America. The current program has facilitated the construction of more than 1,100 solar projects in 42 states. All of this has been at a minimal cost to the tax payer; the 1603 program has supported $18 billion in investment in new renewable energy projects throughout the country and has created tens of thousands of jobs.  The program has helped the solar industry to grow by over 100 percent in 2010, create enough new solar capacity to power 200,000 homes and double domestic solar employment to more than 93,000 Americans.

The TGP was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). President George W. Bush signed the 8-year ITC into law in 2008, but the economic conditions created by the global recession made it clear that few would be able to utilize the tax credit.

So far, the TGP has helped move forward more than 1,100 solar projects in 42 states. A report on the impact of the extension of the TGP by EuPD Research projected it would create 65,000 new U.S. jobs and 5,100 megawatts of solar capacity – enough to power more than 1 million households.

Mazuma Capital is committed to help the growth of renewable energy sources by breaking down financial barriers for companies looking to implement new technologies and green inititatives.
See more at http://mazumacapital.com/

Source Materials
SEIA policy overview of Treasury Grant Program: http://seia.org/cs/federal_issues/treasury_grant_program
Fact sheet on TGP and job creation: http://www.seia.org/galleries/FactSheets/Factsheet_TGP.pdf
Summary of solar projects awarded a Treasury Grant:
The Solar Foundation National Solar Jobs Census 2010: http://www.thesolarfoundation.org/sites/thesolarfoundation.org/files/Final%20TSF%20National%20Solar%20Jobs%20Census%202010%20Web%20Version.pdf

DIVERSIFIED ETHANOL ANNOUNCE PLANT TECHNOLOGY FINANCING PROGRAM THROUGH MAZUMA CAPITAL FOR CUSTOMERS

PASO ROBLES, Calif., & BURNSVILLE, Minn., Dec. 8, 2010 – Greenbelt Resources Corporation (Pink Sheets: GRCO) today announced that its wholly-owned subsidiary Diversified Ethanol Corporation ("Diversified") has established a business partnership with Mazuma Capital to offer leased equipment financing to qualified Diversified customers. Diversified designs,  constructs, monitors and operates highly efficient and cost effective small scale waste-to-ethanol conversion plants that utilize a wide range of organic wastes feedstocks including cellulosic material, by products of breads and grain processing, organic slurry, and other food and beverage waste from beer, wine, and sugar-based products.

            Mazuma Capital is a leading national direct lender and will provide third party financing for qualified Diversified customers. Dedicated to maintaining a portfolio that includes renewable energies, Mazuma provides a sophisticated selection of finance programs that offer the flexibility necessary to meet the range of Diversified customers’ needs. 

            "Providing strong financing options for our customer seeking to own an ethanol plant is a critical avenue to continue the growth of the green fuels industry,” said Darren Eng, CEO of Greenbelt Resources Corporation. “When a partner like Mazuma takes notice and brings their expertise and success to the table, it strengthens customer confidence that ethanol from waste is a viable investment.”

            “Our support for Diversified plant financing is another cornerstone for Mazuma in the renewable energy sector.  By carrying risk and providing solutions to overcome financial barriers on emerging green technologies, more and more middle-market companies can now implement green initiatives.  Promoting the adoption of emerging green technologies is a continued goal of Mazuma Capital and through our partner programs and extensive knowledge of new technology financing Mazuma will continue to enhance energy project offerings,” said Jared Belnap, Mazuma Capital’s President and CEO.

            Diversified currently operates a waste-to-ethanol plant in Paso Robles California that conducts pilot studies on various feedstocks to expand a database of information  to support continued growth of waste-to-ethanol plant production. Shareholders and prospective investors can register for email updates on company financial and operations announcements at www.greenbeltresources.com/investors.About Greenbelt Resources Corporation
            Greenbelt Resources Corporation™ is committed to developing and implementing technology that makes alternative fuel reliable, practical, and efficient. The company is dedicated to delivering business solutions with integrity and perpetually high quality control through intelligent support services. Greenbelt Resources subsidiary Diversified Ethanol Corporation™ provides end-to-end waste-to-ethanol solutions designed to establish a highly efficient installed network of customer-owned modular ethanol plants providing localized processing of locally generated waste into locally consumed ethanol. The company's ethanol plants are built around the award winning Butterfield Closed Cycle System™. Founded in 2001, Greenbelt Resources Corporation is a public company trading under the symbol GRCO.PK. For more information including how to contact the company, visit Greenbelt Resources on the web at http://www.blogger.com/Local%20Settings/Temporary%20Internet%20Files/OLKE4/www.greenbeltresources.com.

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Stepping Inside the Shoes of Medical/Healthcare CFO's- new challenges they face with proposed accounting changes

Mazuma Capital Company offers it's employees an extensive cross training program to become familiar with all aspects of the leasing industry.  Last week we had an accounting expert come in and discuss the proposed accounting changes, and how that will impact businesses and leasing experts. As a followup to our training I reached out to professionals in industries across the board.  Below is a summary of what challenges face CFO's in the medical/health care arena. I wanted to share his insights with you on the proposed accounting changes, and how they are preparing. I think it is critical for us to be thinking outside of the box on how to approach these CFO’s by understanding their mindset.  I hope you find it helpful…

Thanks for your questions regarding the proposed accounting changes, and how they will affect medical/health care purchases going forward.  Yes we have discussed the change concerning leases and how they will all be shown as Capital leases on the Balance sheet. It is a particular concern to us and other facilities like us that have large loans on their existing property and have to maintain Debt covenants per their loan documents. For example like Debt Service Coverage and Long term debt to capitalization. This will most definitely put expansions and additions planned for facilities on hold.  Being able to maintain certain grants and financial benefits through the government come to us by keeping facilities profitable.  By adding debt to our books, we will have to re-think our strategies to maintain these benefits we currently receive.

With that said we may have to look at delaying purchase of larger capital items and end up trying to pay cash for them. Smaller Capital items we will definitely pay cash.

Remember too that we operate several hundred Critical Access Hospitals (under 25 beds) that can take advantage of being reimbursed by Medicare at cost. Prospective payment hospitals cannot take advantage of that so it may even be more difficult for larger facilities when looking to purchase larger items, such as MRI and X-Ray machines.

Those are just a few of my thoughts.  We will be interested to see what leasing companies put together as an offering for facilities like ours.  Right now we are going with cash, but if there is a product that arises, I know that CFO’s all over the country will welcome it, if it can help the balance sheet.

Mazuma Capital: Mazuma Capital Funds $5 Million to One of Country’...

Mazuma Capital: Mazuma Capital Funds $5 Million to One of Country’...: "Mazuma Capital Funds $5 Million to One of Country’s Largest Coal Companies"

Proposed Accounting Changes...What is next for businesses?

The big question looming over the proposed accounting changes, is how will big business deal with the disappearance of operating leases? 
I'm not an expert, however I can tell you a few things for certain. First, most companies lessors and lessees are hiring accountants with heavy international experience in real estate. Second, the financial accounting impact is not going to result in competitive disadvantage since all companies must comply. Third, there will be differences in the overall adjustments experienced depending on how mature the leases are with respect to tenant occupying the space.

The valuation topic will pick up more steam and perhaps the number of options to renew included in the original lease will be reduced, basically the leases may be written differently. Overall there will be more transparency as to financing strategy in companies who have chosen to lease all locations rather than invest in capital assets - the wirelesss telecom industry generally leases all tower locations or builds to suit on leased land. There are many discussion brewing within this industry regarding how to move froward with new tower locations.

Most important at this moment is to prepare the shareholders for drastic changes in reported numbers. Applying the proposed changes will mean putting most of your leased assets on balance sheet, which will result in changes of businesses financial performance indicators, such as ROI. It will also affect the structure of earnings statement, as the expenses will be moving lower in your income statement. It is also important that some bank covenants may be affected. The preparation for such changes requires careful management of expectations, from both, shareholders and banks.

Bottom line, business will adjust and continue on, still exercising the option to pay cash or lease. The leasing industry will continue to grow and evolve with the changes likely to be put into effect (Mid- 2011).  New products and offerings will still add value for businesses and will continue to be a great option to keep operating cash clear, as well

Operating Leases- A thing of the past- What the future holds…

By doing away with operating leases, new accounting rules could bring billions of dollars back onto balance sheets.
Accounting-standards setters are under fire, again. The new leasing standard, proposed jointly by the Financial Accounting Standards Board and the International Accounting Standards Board, has been characterized as naïve, lacking value, and in need of serious reevaluation. The outcry comes not from a handful of opponents but from companies on both sides of common lease contracts — those that rent office space, copiers, or airplanes and those that own the assets.
At the center of the maelstrom is the “right-to-use” asset concept, the accounting mechanism that places leased assets and liabilities on the balance sheets of lessees, as if they owned the assets. That would essentially eliminate operating leases. Credit Suisse estimates that, within the S&P 500 alone, the volume of assets returning to balance sheets could surpass $550 billion.
Read entire article http://www.cfo.com/article.cfm/14540137/2/c_14540453?f=most_read

What will 2011 hold for Equipment Finance?

Looking towards 2011 we are asking a lot of questions.  What will the equipment leasing industry do, how will it adapt? Will Money Come Back into Equipment Finance?

We are already seeing a large number of banks bid aggressively for middle-market and larger small-ticket transactions. Some of the national banks have been going up to $250,000 and $300,000 on an application-only basis for bank customers on equipment and industry sectors they like.

There are a few new entrants into the small-ticket application-only market, including the broker market (on a selective basis). This trend will probably continue in 2011 and pricing will be very aggressive on quality transactions.

This is a mixed bag for syndicators of transactions. On one hand, there will be more sources of capital available. On the other hand, there may be a large rate differential between walking down the street to Wells Fargo and getting financed at 4% and selling a broker transaction with points - so the syndicator world will continue to be predominantly "B" and "C" deals, not true "A" deals.

Lots of Smaller Banks will Continue to Fail and Shed Assets
The FDIC will begin to press weaker banks to shed assets and shut down now that there is ample liquidity in the overall system. As such, we see opportunities to purchase portfolios and leasing companies from banks next year. There will, however, be lots of bidders for those assets.  In general, we will see greater separation of the "haves" and the "have nots" in the funding world and the "haves" are going to be buying market share.

What will 2011 Hold?
We are coming out of a very deep recession, and tangible recovery is only just begging. For many leasing companies it is still going to be a difficult year. Overall equipment demand - especially for small businesses - is still weak (even though it is better). There are just not enough good deals to go around.  The next year is going to require huge amounts of hard work to be profitable.

More Competitive
Even small leasing companies are in a world market. Large companies like GE, Wells Fargo, Bank of America, Chase, etc. are constantly investing in new technology. These companies do collections from India at a much lower cost than small companies in the US. The large companies are run by smart people who are out to crush us all (Yikes!). In 2011 this trend will continue (as it will in 2012 and 2013 and forever). You had better be ready to compete.  You had better add some value or you are done.

Banks Will Still Be Banks
Having said that large institutions and especially banks are going to continue to be big competitors, there is an opposite side of the coin. The banks are struggling with increased regulation (unlikely all of it will be repealed even with a Republican House) and they are generally not interested in small, complex areas of the economy. Thus, we see that value will continue to be added by focusing on the complex and focusing on "niche" markets.

People Will Wake Up to Accounting Change
Radical accounting changes are coming. The smaller the borrower the less effect the changes will have. However, it will open up real opportunity for lessors willing to take big residual risk in the future as companies will be interested in shedding liabilities from the balance sheet. We will be back to having lessors who are actually in the equipment business. Change will not likely come until 2013, but next year is only two years away!

Construction Equipment Financing

If you are in the construction business, most likely you’ll need to buy new equipment to keep up with growth, as well as purchasing equipment to upkeep and/or add to an existing fleet of construction equipment. Most businesses are not in the position to pay cash, and still have large operating funds left over. Now more than ever equipment lease financing offers huge tax advantages, bonus depreciation and flexibility for companies purchasing new and used equipment.

After you research and decide what equipment you need and whether you want the equipment new or used, now you need to decide if you will use a bank or equipment finance company. With the tightening on lending restrictions for banks, it proves to be more and more difficult to obtain financing on equipment.  So what options do you have?  Mazuma Capital has the flexibility to meet your needs when structuring leasing options for new or used construction equipment.
Even if you aren’t looking to purchase immediately, finding a reputable equipment finance company, such as Mazuma Capital  for your equipment financing is a good idea. Leasing is a great option that allows you to hold onto your available cash in case of a business emergency. Many people immediately think of their local bank branch when looking for a loan. Local banks can be a good place to begin, but a company that specializes in equipment financing will have more knowledge on equipment finance, and is a great option for more flexibility to meet your financial goals.
At Mazuma Capital we are committed to delivering superior service and competitive products at the lowest possible cost. We work with companies of all sizes across all industries to craft flexible, custom leasing solutions. From short economic useful life equipment such as telephony and computer systems to vital revenue generating equipment such as heavy machinery and medical equipment.
Please contact us today for additional information 801-816-0800 info@mazumacapital.com.  Visit us 24/7 at http://mazumacapital.com/

Strategic Partner Programs

Mazuma Capital is proud to announce our new Strategic Partner Programs. A comprehensive approach to turnkey services for bankers and brokers.
email us for addtional information partners@mazumacapital.com

Proposed lease accounting practice changes

I recently read an article that discussed many concerns regarding the regulatory changes looming over the lease accounting project. Many companies have been writing comment letters to the FASB and IASB boards regarding the proposed changes, and how these changes will affect day to day business.
Big changes are on the horizon, but the need to change lease accounting methodologies, raises another question—should companies delay new technology investments?  Many companies are unsure about how to proceed with new purchases.  Should they continue to rely on existing systems that adequately work for their companies today? Is it too risky to invest in new technology during this period of uncertainty?
What is the right answer?  It seems that companies must weigh the cost of no action. Companies must factor the cost in continuing to support and maintain disparate back office systems while they wait for this initiative to be firmly resolved. If companies delay the decision to make investments to update and/or integrate these systems, companies will face increased IT costs and critical data may not be consolidated and shared throughout their company.  Waiting could therefore hinder crucial decision-making, causing them to confront a different kind of risk altogether.
New changes and methodologies will continue, as companies continue to grow and adjust around them.  If we all sit and wait for outcomes we will miss out on a lot of business opportunities.  Great companies seem to know how to gracefully embrace either outcome of proposed changes…a chameleon of sorts…ready to adapt and carry on.

ELFF: Equipment Finance Confidence Continues to Rise

Overall, confidence in the equipment finance market is 65.5, an improvement from the October 2010 index of 58.8, according to the Equipment Leasing & Finance Foundation’s release of the November 2010 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).

“The optimism shared by the speakers and attendees at the ELFA Annual Convention may be one of the best leading indicators that the industry is on the rebound,” said survey respondent Adam Warner, president, Key Equipment Finance. “This annual gathering always provides a glimpse into the overall equipment finance industry, and this year both attendance and energy were high. Our experience at Key Equipment Finance is also in sync with the survey results that show increasing confidence in the market. We’ve seen a recent increase in new business activity, and I join the ranks of those who are cautiously optimistic about the state of the industry.”
When asked to assess if their current business conditions would remain the same in the next four months, 38% of executives responding said they believe business conditions will improve, an improvement from 26.8% in October. No respondents believe conditions will get worse (compared with 7.3% in October), and 61.9% believe business conditions will remain the same in the next four months, down from 65.9% in October.
43% of survey respondents, up from 34% in October, believe demand for leases and loans to fund capital expenditures (capex) will increase, while 55%, down from 61%, in October, believe demand will “remain the same” during the same four-month time period. 2.4% believe demand will decrease, a drop from 4.9% in October.
64.3% of survey respondents indicate they expect the “same” access to capital to fund business, a significant decrease from 78% in October. 35.7% of executives expect more access to capital to fund equipment acquisitions, up from 22% in October. No one expects “less” access to capital, an improvement from 4.7% last month.
When asked, 40.5% of the executives reported they expect to hire more employees, up from 22% in October, and 47.6% expect no change in headcount in the next four months, while 12% expect fewer employees, up from 7.3% in October.
100% of the leadership still evaluate the current U.S. economy as “poor” or “fair,” at 33.3% and 66.7%, respectively.
40.5% of survey respondents believe that U.S. economic conditions will get “better” in the next six months, an improvement from 17% in October. 59.5% said they believe the U.S. economy will “stay the same” in the next six months, down from 75.6% in October. No one responded they believe economic conditions in the U.S. will worsen over the next six months, down from 7% who believed so in October.
In November, 45.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 36.6% in October. 54.8% believe there will be “no change” in business development spending, down from 63% last month.
Survey results are posted on the Foundation website, http://www.leasefoundation.org/IndRsrcs/MCI/. Survey respondent demographics and additional information about the MCI are also available at the link above.

Quantitiative Easing- Struggling to Make Sense of it.

What exactly is the point of quantitative easing? Two weeks after the U.S. Federal Reserve decided to buy $600 billion of government bonds, the debate still rages. The U.K. has already purchased 30% of the existing stock of national debt, and the Monetary Policy Committee is clearly willing to countenance buying much more.
The question is what all this government bond-buying is supposed to achieve? The Chinese believe the U.S. is using QE to attempt an underhand devaluation of the dollar, a view apparently shared by former Fed chairman Alan Greenspan. Others believe the purpose of QE could and should be to provide liquidity to the banking system, both via the accumulation of cash deposits and the increased supply of funds to buy bank bonds. Given so many competing views, it's no wonder people are confused. Some economists have concluded the attitude of central banks to QE is to shoot first and declare whatever they hit is the target.
But that is hardly a recipe to instill confidence, perhaps the most important channel through which QE is likely to work. In fact, confusion over motives could even act to damage confidence if the markets start to question a central bank's commitment to fighting inflation and willingness to unwind QE. It is hard to feel confident about how QE will end if you don't know why it was begun.

Mazuma Capital: FDIC Steps Up Investigations at Failed Lenders; 'T...

Mazuma Capital: FDIC Steps Up Investigations at Failed Lenders; 'T...: "The Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. ban..."

FDIC Steps Up Investigations at Failed Lenders; 'These Numbers Will Increase'

The Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. banks that have failed since the start of the financial crisis.
The agency responsible for dealing with bank failures is stepping up its effort to punish alleged recklessness, fraud and other criminal behavior, as U.S. officials did in the wake of the savings-and-loan crisis a generation ago. More than 300 banks and savings institutions have failed since the start of 2008, but just a few have led to criminal charges being filed against bank officials.

Read more at http://mazumapartners.blogspot.com/

Connect with Mazuma Capital on Social Media! via #constantcontact

Connect with Mazuma Capital on Social Media! via #constantcontact

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Machinery Makers See Increased Demand 'Across the Board'

Machinery Demand on the Rise

Companies have seen increased demand across the board in the Farm and Construction Machinery sector. Several factors are combining to create a good earnings season for many companies within the sector. Emerging and developed markets have both seen strong growth in the recent quarter. While many companies have focused most of their investments on emerging economies like China, Latin America has actually been one of the strongest markets recently. Countries there, especially Argentina and Brazil, have experienced high double digit growth in equipment sales as compared to last year. Some economists predict the global economy will grow 3.5% next year, with 6.5% growth in emerging markets. The weak U.S. dollar has also been helping sales for American companies.

On the agricultural side of things, machinery companies have seen a huge boost from growing corn prices. Demand for corn has been high due to a projection that 37% of this year's crop will be used for bio-fuels. It's expected that the profits gained from high prices should trickle down to the Farm and Construction Machinery sector as farmers look to upgrade and repair equipment they had been putting off due to weak markets.
Renewed levels of spending are also taking place in the mining equipment industry. After putting off upgrades and repairs due to weak commodity prices, miners are beginning to spend money on equipments now that coal, copper, and iron ore prices have recovered.

Proposed Tax Code Changes- What it Would Mean to Businesses

According to the WSJ, tax-reform plans proposed by President Obama's deficit-cutting commission would radically change corporate tax policy and, business groups say, could improve U.S. competitiveness in global trade. The proposed changes could also create winners and losers among U.S. companies.
Business groups and economists have long sought fundamental changes to the tax code, which hasn't been overhauled since 1986.

Although we may be in need of a tax overhaul, how do we decide on the right one?  Small businesses drive this countries economy, creating new jobs and opportunities.  Taxes have become so complex and convoluted, it seems there is no light at the end of the tunnel. So how can we in theory create beneficial tax laws that still support business and entrepreneurs? Are these proposals a major step forward, or just additional red tape to the never ending tax code?

Here are the proposed plans-

Option 1, called The Zero Plan, would impose a rate of 26% to 28%, down from the current 35%. In return, it would eliminate all or most "tax expenditures," or provisions such as capital gains or tax credits that lower a company's tax bills.

Option 3, called the Tax Reform Trigger, merely says that if Congress hasn't cut the deficit by 2013, then companies would be subject to a 15% reduction in all general business-tax credits.
Option 2 is more detailed, and is based on a proposal by Sen. Ron Wyden (D., Ore.) and Sen. Judd Gregg (R., N.H.). In return for a 26% tax rate and a permanent extension of the temporary research-and-development tax credit, it would eliminate certain popular deductions, including one for domestic manufacturing. It also would cut various oil-and-gas tax breaks, and modify depreciation, a tax treatment that often provides companies with tax-minimizing deductions soon after property or equipment is acquired.

Perhaps most important, Option 2, and variants of Option 1, would shift the U.S. to a "territorial" tax on corporate income, a change business groups have endorsed. The current system taxes foreign corporate earnings at the U.S. rate only when they are repatriated, which might encourage U.S. multinationals to keep profits offshore.

We believe in the power of business and how it fuels the economy.  This should be interesting given the job growth in our country is due to small business.  We will definitely keep our ears to the ground on this.

Mazuma Capital

U.S. Farm Tractor, Combine Retail Sales Surge in October

According to the Association of Equipment Manufacturers, total U.S. farm tractor unit retail sales were up 20.3% to 14,648 in October from 12,177 in the same month in 2009. Larger, more powerful four-wheel tractors surged in October, with unit sales up almost 83% compared to last year.

For the year, this segment of the farm machinery market was up 26.9%. Year-to-date farm tractor sales through October were up 4.1% compared to the first 10 months one year ago.

Combine unit retail sales were up from 895 in October 2009 to 1,112 units this year or 24.2%. Year-to-date combine sales increased from 8,342 last year to 8,816 in the current period or 5.7%.

Deere & Company notes in its most recent farm machinery outlook that with support from healthy farm cash receipts, solid commodity prices and low interest rates, industry farm-machinery sales in the United States and Canada are forecast to be up 5 to 10% for the year with much of the strength concentrated in larger equipment.

Thursday, November 11, 2010
Source: Monitor Daily

What the Mid-term Elections Mean for Geothermal Energy | Renewable Energy News Article

What the Mid-term Elections Mean for Geothermal Energy Renewable Energy News Article

September Machine Tool Consumption Up 157% Over ’09

September’s machine tool consumption totaled $339.76 million, up 156.8% compared with the total of $155.69 million for the same month in 2009. That puts the year-to-date total at $2,090.27 million, up 74.1% compared with the same YTD figures in 2009.
This comes from the U.S. Manufacturing Technology Consumption Report is compiled by the American Tool Distributors’ Association and The Association for Manufacturing Technology.
“September 2010 was a watershed in the recovery from the recession of 2008-2009,” said Peter Borden, AMTDA President. “The 1,992 units sold (in September) is the highest number since September of 2008 and demonstrates the resilience and staying power of the U.S. manufacturing base. More remarkably, this was done while many factories are running below the capacity levels that require capital goods purchases, despite the tight credit, and in spite of questions about government debt and potential tax increases. The catalysts of the successful IMTS, the weaker dollar, and the passage of bonus depreciation paid surprising and long awaited dividends.”
By region, Northeast consumption stood at $64.44 million, 66.3% higher than August’s $38.76 million and 77.4% higher that the September 2009 total. A year-to-date total of $362.73 million was 53.4% more than the same figure for 2009.
The Southern Region’s manufacturing technology consumption totaled $66.85 million, up 119.9% when compared with the $30.4 million total for August and up 389.4% when compared with September a year ago, the report noted.
For the Midwest, consumption was 49% more than August’s $81.75 million and up 157.6% when compared with last September. The $629.19 million 2010 YTD total was 84.4% above the 2009 total at the same time.
The Central Region saw manufacturing technology consumption climb to $114.99 million, 77.0% more than the August total, and 238.3% higher than the total for September 2009. With a YTD total of $561.03 million, 2010 was up 94.0% compared to the same period in 2009.
The Western Region also saw an increase in consumption, with a total of $31.68 million in September (up 27.5%), compared to August’s $24.84 million. At $228.66 million, 2010 YTD was 36% higher than the comparable figure a year ago.

ELFF Study: Changes to Lease Accounting

Proposed changes to lease accounting rules will significantly impact the balance sheets and operations of companies that use lease financing (lessees) and providers of lease financing (lessors), according to a new study from the Equipment Leasing & Finance Foundation.
The study, “Changes to Lease Accounting: Rules, Reactions and Realities,” is designed to help users understand the proposed changes, recognize the market impact of the changes, and identify the challenges and opportunities they represent.
The lease accounting proposal was released by the International Accounting Standards Board and the Financial Accounting Standards Board in August, and a final rule is expected in 2011. Although the proposal is intended to standardize the lease accounting process, it is expected to add significant complexity and processes to both lessor and lessee accounting.
The Foundation’s study examines how the changes are expected to:
• Affect customers’ propensity to lease
• Alter the attractiveness of lease financing
• Modify customers’ approach to lease transactions
• Change how lessors develop and market financial products
• Impact lessor and lessee business processes and related portfolio management systems
• Influence lessor business models and ownership structures
• Affect equipment leasing and finance providers’ decisions to remain in the market or encourage new entrants to replace them
“While the full impact of the lease accounting changes on the equipment leasing and finance industry is still unknown, both lessees and lessors are advised to take action now,” said Edward Dahlka, chairman of the Foundation and President of Assurance Asset Finance. “First, submit a comment letter to the FASB and IASB that provides your company’s views on the changes. Second, use the Foundation’s new study to develop a plan of action so you’ll be ready for the impending changes.”
To read the executive summary of “Changes to Lease Accounting: Rules, Reactions and Realities” the full report can be purchased here http://www.leasefoundation.org/IndRsrcs/MO/FASB.htm.
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research. Primarily funded through donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. Visit the Foundation online at http://www.leasefoundation.org/.

The Power of the Future

GOP Fights to Extend Bush Era Tax Cuts

Newly empowered Republicans pushed to extend Bush-era tax levels and pledged significant cuts in spending, as Obama sought to maintain his footing in an escalating budget battle. Jerry Seib discusses.

http://online.wsj.com/video/gop-fights-to-extend-bush-tax-cuts-for-years/53C3A451-18D3-4856-9AB7-C6F6FFA2ADA9.html

IT IS TIME TO MOVE ON YEAR END TAX ADVANTAGES!

You do not want to let the current Tax Breaks pass you by, allow Mazuma Capital to show you how to take advantage of these Tax Breaks in 2010.

Code Section 179 Expensing-
A qualifying taxpayer can choose to treat certain property as an expense and deduct it in the year the property is put into service, rather than depreciating it over several years.  The Small Business Jobs Act of 2010 increases the maximum deduction an eligible taxpayer may elect to claim to $500,000.  The qualifying property cap has also been raised to $2 million and will phase out, dollar-for-dollar, until the qualifying property cost exceeds $2.5 million.
Bonus Depreciation you don’t want to miss!
The Act also extends, through December 31, 2010.  This means you may take a 50% first year bonus depreciation deduction for qualifying property purchased and placed into service in 2010.  The real bonus- the depreciation deduction can be used in addition to the Section 179 deduction.
Now, more than ever, the financing of your equipment should be top of mind.  Contact Mazuma today and see how equipment financing can be a powerful tool for your business.
Mazuma Capital specializes in providing customized equipment lease financing solutions to businesses. Mazuma Capital is committed to delivering superior service and competitive products at the lowest possible cost. We work with companies of all sizes across all industries to craft custom leasing solutions. From short economic useful life equipment such as telephony and computer systems to vital revenue generating equipment such as heavy machinery and medical equipment.
For More Information Contact us
info@mazumacapial.com
vendorsolutions@mazumacapital.com
partners@mazumacapital.com

Fed is Poised to Allow Healthy Banks to Increase Dividend Payments

The Federal Reserve is poised to allow healthy banks to increase dividend payments for the first time since the financial crisis, an anxiously awaited set of instructions that could provide a boost to bank stocks.
According to people familiar with the matter, regulators as soon as next week are expected to give guidance outlining the standards banks must meet to increase dividend payments. The Fed is expected to take a conservative approach that would require banks to demonstrate their ability to meet tough new international capital standards and any requirements stemming from the U.S. financial-regulatory overhaul.
Many U.S. banks are itching to boost payments to shareholders, citing improved profits, because they have long relied on a steady stream of dividends to lure investors. But they have been in a holding pattern as regulators across the globe hashed out new rules requiring banks to hold more capital as a buffer against future losses. Moreover, in the wake of the crisis, regulators have closely scrutinized banks' use of capital, essentially freezing their ability to increase dividends.
The Fed isn't expected to approve dividend payments en masse but will look at an individual institution's ability to meet the criteria it outlines, according to people familiar with the matter. It is likely, however, to give approvals in batches within the same quarter, to avoid putting any one firm at a competitive disadvantage.
A big part of the Fed's thinking are lessons learned from Japan, where prolonged uncertainty about the health of Japanese banks stymied that country's economic recovery. Regulators want healthy banks to get credit from the markets for increasing their capital bases.
Some banking analysts said allowing firms to increase dividends would telegraph to the markets that the financial sector is continuing to stabilize. "It signals that the health of the system has improved and will continue to improve going forward," said Todd Hagerman, an analyst with Collins Stewart.

Wells Fargo & Co. Chief Financial Officer Howard Atkins said Thursday that returning capital to investors is a "high priority" for the fourth-largest U.S. bank in assets once regulators approve doing so.

Wells Fargo shrank its quarterly payout by 85% last year. Citigroup Inc. hasn't paid a quarterly dividend since February 2009. Regulators allowed J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and some other financial firms to buy back their own stock recently, suggesting federal officials were softening their resistance to dividend increases.

James Dimon, CEO of J.P. Morgan Chase, said recently on an earnings conference call that he hoped the bank could boost dividend payments in the first quarter of 2011.

Dividend payments are especially important for banks now that the financial industry's outlook is clouded by the sluggish economy, toughened regulation and looming capital requirements. Despite rebounding profits, a big-bank stock index from Keefe, Bruyette & Woods Inc. is up 11.6% so far this year after Thursday's rally, surpassing the Dow Jones Industrial Average's gain of 9.7%.
While the banks were waiting for the green light to restore their payouts, other companies have been boosting dividends in recent months, making their shares more attractive, especially given the slow growth in the economy. Financials on average yielded 4.4% in 2008, making them one of the highest-yielding sectors, according to Standard & Poor's. Now they yield 1.1%, making them the second-lowest yielding sector in the market, according to S&P.

Only a handful of banks are expected to meet the Fed's test, said Frederick Cannon, co-director of research at KBW. Among those with strong enough capital ratios are J.P. Morgan Chase, US Bancorp, State Street Corp. and Bank of New York Mellon Corp., he said.

Banks, nonetheless, are unlikely to return to precrisis payout ratios, which in some cases reached 50% of earnings. Analysts said banks are more likely to return to 5% to 10% levels for the near future.
In Washington, increasing dividends could arouse the ire of lawmakers and the White House, which has complained that banks aren't lending enough. KBW's Mr. Cannon said increased payouts shouldn't crimp lending because banks are "sitting on plenty of excess liquidity."

What the Newly Elected Congress Means for Business

One area where President Barack Obama and congressional Republicans could find common ground is trade. Mr. Obama wants to submit a revised South Korea free-trade agreement for congressional approval in January, and hopes to unveil new terms addressing U.S. auto and beef exports during the Group of 20 meeting of global leaders in Seoul next week. Mr. Obama has said he wants to boost U.S. exports by 50% during the next five years. Trade-skeptics in the Democratic caucus have blocked movement on trade-opening deals such as the South Korea treaty.

Jerry Seib and Neal Lipschutz discuss whether the GOP's House victory will impact the implementation of financial reform and health care.

Senate Minority Leader Mitch McConnell (R., Ky.,) said trade is one area where his caucus and the White House could work together. But it is unclear whether the new class of populist, tea-party Republicans share the traditional GOP view that free-trade deals are good for the U.S. economy overall. Big business groups see passage of the South Korea pact as a critical test of whether the White House and Congress can break the stalemate on trade issues.
—Elizabeth Williamson

Defense

Within national-security circles and the defense industry, there is some nervousness about whether the new Congress could push broader cuts in defense spending as part of an attack on the swelling federal deficit. In the past, a Republican House and a more conservative Senate would have been a guarantee of continued defense budget growth. But the influx of tea-party candidates, elected on promises to oppose pork-barrel deals and earmarks and reverse the growth of federal spending, could chart a different course. Debate over how much more to spend on the war in Afghanistan could become a test of the new Congress's direction ahead of the administration's deadline to begin phased withdrawals in July 2011.
Adding to the uncertainty is the expected departure of Defense Secretary Robert Gates in 2011. Mr. Gates, who served as a secretary of defense under George W. Bush before joining the Obama administration, commands the respect of congressional Republicans.
—Nathan Hodge

Energy and Environment

A Republican House represents a big challenge to Mr. Obama's ambitious agenda on energy and the environment. House Republican leaders have said they intend to fight and if necessary deprive funds to the effort by Mr. Obama's Environmental Protection Agency administrator, Lisa Jackson, to regulate greenhouse-gas emissions across wide swaths of the economy using the Clean Air Act. Ms. Jackson could also come under fire from coal-state Democrats in the Senate.
Another potential flash point: offshore drilling. Republicans are expected to call on the Interior Department to speed approval of permits that oil companies need to drill in deep-water areas of the Gulf of Mexico.
Republicans also could challenge the Obama administration's effort to stop construction of a nuclear-waste repository at Yucca Mountain in Nevada—a decision opposed by the nuclear-power industry. Tuesday's victory by Senate Majority Leader Harry Reid, a longtime foe of the project, should keep Yucca Mountain in the deep freeze for now.
—Stephen Power

Transportation

This is supposed to be the year that Congress acts on a big, multiyear bill to finance road building, airport construction and other transportation projects. The Obama administration last year successfully pushed for a delay of action on a proposed $500 billion transportation bill, despite strong protests from House Transportation and Infrastructure Committee Chairman James Oberstar, (D., Minn.) Now, Mr. Oberstar is gone—defeated in his bid for re-election. Ready to take his place is U.S. Rep. John Mica (R., Fla.) Mr. Mica said in a statement Wednesday that passing a long-term highway and transit plan and measures to fund the Federal Aviation Administration and water projects are his top priorities. Mr. Mica also called for a "better directed high-speed rail program." Mr. Mica is more likely than Mr. Oberstar to encourage a bigger role for private investors in building new infrastructure projects, and has called for streamlining the process of getting projects approved.
Infrastructure spending is one area where business groups welcome federal spending. The U.S. Chamber of Commerce, which invested heavily to defeat congressional Democrats in the 2010 elections, has supported raising taxes to fund transportation improvements.
—Melanie Trottman

Health Care

Health-care companies see the Republican win as a chance to chip away at aspects of Mr. Obama's health overhaul least favorable to the industry. Insurance companies, drug manufacturers and hospitals say they will press to peel away the law's new taxes on health-care companies, pass tougher medical malpractice curbs and knock down a new board that recommends Medicare spending cuts. Opponents of the law may have the most success removing the law's new tax-reporting requirement that requires businesses to file a 1099 tax form when they pay a vendor more than $600 in a year. Where the health industry is most concerned about the Republicans' plans is the party's strong opposition to the law's requirement that most Americans carry insurance or pay a fine, something that could cost health-care providers millions of new customers. House Republicans say they plan to pass a bill repealing the law. That will almost certainly die in the Senate or on Mr. Obama's desk.
—Janet Adamy

Pharmaceuticals

The pharmaceutical industry wants to hold on to concessions it won from Democrats during their reign in Congress, while benefiting from antiregulatory sentiment among Republicans who captured the House, industry lobbyists said.
In negotiations over the health bill that passed in March, the industry offered $80 billion in savings and won a promise from the White House not to pursue certain cost-cutting steps such as importing cheaper drugs from Canada. About half of the savings was intended to close a gap or "doughnut hole" in Medicare drug coverage that some seniors face. Despite Republican calls for a repeal of the health law, drug-industry lobbyists say they don't expect a GOP bid to reopen the doughnut hole because it would anger seniors and risk giving wounded Democrats a rallying cry. The incoming Republicans also may be more sympathetic to industry views on regulation, such as the industry's push to continue a system under which companies pay user fees to get faster decisions on drug applications.
—Alicia Mundy

Wall Street

House Republicans didn't wait for the final results of Tuesday's vote to launch their assault on the Obama administration's effort to tighten regulation of Wall Street.
Rep. Spencer Bachus, an Alabama Republican who will be one of the contenders to take over the House Financial Services Committee next year, said Wednesday he wants to rewrite "job-killing provisions" of the Dodd-Frank financial-overhaul law, starting with new rules on derivatives trading. Also high on Mr. Bachus's agenda: overhauling mortgage-finance giants Fannie Mae and Freddie Mac. Republicans want to wind down the two companies, currently under government control.
But any effort to change Dodd-Frank would need Democratic support in the Senate, and then Mr. Obama's signature. In the event those aren't forthcoming, House Republicans could try to cut off funding for agencies implementing Dodd-Frank or grill administration officials in Capitol Hill hearings.
—Victoria McGrane

Telecommunications

House Republicans will likely put the brakes on efforts by the Federal Communications Commission to re-regulate Internet lines. Phone and cable companies are fighting the plan, and Republicans have already warned the FCC to drop the plan.
Telecom and tech policy issues are likely to take a back seat next year. But Republicans and Democrats could find common ground in efforts to write stronger rules on Internet privacy.On Wednesday, two leaders of the House Energy and Commerce Committee, Rep. Joe Barton (R., Texas) and Rep. Ed Markey (D., Mass.), jointly warned that they plan to put "Internet privacy policies in the crosshairs" with hearings and legislation.

Read entire article

U.S. Manufacturing Powers Up in October

Unexpectedly, manufacturing unexpectedly picked up steam in October, raising hopes for a strong final quarter that could underpin a flagging economic recovery, a key industry survey showed on Nov. 1.

The Institute of Supply Management (ISM) said its survey of purchasing managers nationwide revealed strong gains in new orders and production, pushing up its index to 56.9%, from 54.5% in September.
The surge was much stronger than a dip to 54% expected by most analysts.

"The ISM index posted a surprisingly strong rebound in light of the report last week that the general economy remains in a growth slump," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "The important reason for the October rebound is the reversal of the trade situation.  Export growth reportedly surged while import growth backed off. In other words, less domestic spending was drained away to support foreign manufacturing and more production was directed to domestic producers. 
"Manufacturers have experienced parts availability problems for the last six months and  have been slow to ramp up production allowing imports to fill the void," he added. "The ISM report suggests that, at last, the import surge in manufactured goods may be subsiding with all the beneficial side effects (rising orders, production, and employment). Today's ISM report is good news for U.S. manufacturing."
Manufacturing activity has expanded for 15 consecutive months but momentum had been slowing since April. The October jump suggested new life in the sector that has been a key driver of the recovery after recession officially ended in June 2009.
"This month's report signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter," said Norbert Ore, head of the ISM's manufacturing business survey committee.

Copyright Agence France-Presse, 2010

How To Determine The Best Approach For Financing Your Equipment

If your company is looking to expand, upgrade or just keep operations running smoothly, having the right equipment financing solution can affect your overall financial position. Financing is available for all sizes of equipment acquisitions, from technology upgrades to heavy equipment such as mining equipment or yellow iron. When seeking out an equipment financing source, it’s important for businesses to be prepared.

What are the first things to consider when financing equipment?
Look at your company’s capital position to determine what the right financing option is. Future cash flow should also be a consideration, as financing may affect the cash flow of the company both in terms of the productivity the equipment may provide and the required payments. It is also a good idea to consult with your company’s accountant to help determine the best option available for the business.
Before acquiring equipment, evaluate the value that the equipment is likely to bring your business. Business leaders then need to decide what financing product makes the most sense for the company, whether it is to lease the equipment, obtain a loan or use cash to purchase. Each option has its benefits.
A lease, for example, typically has little to no out-of-pocket expense up front, whereas a loan may require a down payment or equity injection into the equipment. Business leaders should also consider what impact a lease or loan will have on the company’s balance sheet. Some leases are off-balance-sheet financing, so the lease payment shows as an expense on the income statement rather than a liability on the balance sheet. If leased, the asset is not carried on the balance sheet either. This can be helpful for a company that has to comply with leverage or debt covenants because these ratios remain unaffected with a lease. Leases can also provide a company with more flexibility regarding the equipment. Some lease structures can include options to return the equipment at the end of the lease, upgrade the equipment, purchase the equipment, or renegotiate the lease. This can allow a company to keep up to date with changes in technology and may provide a competitive advantage in the market.

Can multiple pieces of equipment be financed?
Many business owners want the convenience of a single transaction covering multiple items instead of having separate transactions for various pieces of equipment. Equipment can be combined into a single transaction based on the equipment types, reasonable usefulness, or life. For example, if two pieces of equipment are being acquired, one with a useful period of 10 years and the other a useful period of five years, financing may be structured for seven years to combine the equipment and provide the convenience of one note to the borrower.

When should companies apply for equipment financing?
You should begin to explore financing options as soon as you think that you may need to acquire any new or used equipment. For a company that is expecting to grow and is forecasting an equipment need at a later point and time, equipment lines of credit may be a smart option to have in place in order to provide flexibility to purchase the equipment more efficiently on your own schedule.

Are there special interest rates or payment plans available for equipment financing?
In some cases, a company may obtain financing with no payment due for a period of time, designed to allow the company to get the new equipment up and running and producing revenue before a payment is due. Other seasonal businesses may opt for structured, or skip, payments, which allow the company to match payments to the seasonality of its business and can improve cash flow.

Do certain types of equipment financing offer tax advantages?
When a company purchases equipment, it may be able to take depreciation deductions over a period of time, which lowers its taxable income. Many companies over the last several years have also been able to take advantage of government stimulus programs that allow for accelerated depreciation of equipment or an increase in the Section 179 expense allowance. The interest payments of an equipment loan, and the entire lease payment for some lease structures, are also expensed on the income statement, which can lower taxable income. Before making a purchase, talk to your accountant or tax adviser to learn how specific tax incentives can work for your business.